documentary

Activists Outraged As Celebs Dine On Gold (PHOTOS)

by Stephanie Marcus on January 14, 2012

Huffington Post…

We revealed the decadent menu for this year’s Golden Globe awards, and the news that the show’s attendees will literally be eating gold has anti-hunger activists none too pleased. Only the finest ingredients will used for the trio of chocolate delice almond crunch terrine with acacia honey, caramel, and fresh berries, executive pastry chef Thomas Henzi told Reuters — the chocolate will be flown in from Switzerland, the acacia honey caramel will arrive from France, the Tarragon hazelnuts come from Italy, while Valencia almond paste from Spain. “It’s a rich dessert,” said Henzi of his dish that will be sprinkled with 23-carat edible gold flakes and a white chocolate ball sprayed with gold dust. “In today’s market, gold costs $1,600, $1,700 for an ounce, sometimes up to $2,000, so it’s expensive,” he explained. “We’re looking at $1.20 per plate just for the gold flakes. And we’re preparing 1500 plates!” If you do the math, — $1,800 — it’s no wonder activists are angry. Joel Berg of New York City Coalition Against Hunger told the UK paper The Guardian , “I resent that a wealthy society allows its neighbors to face hunger.” Berg explained that he doesn’t resent the wealthy eating well, but against the backdrop of a country where nearly 50 million Americans are experiencing “food insecurity,” learning that there are people actually eating gold, leaves a bad taste in his mouth. “I don’t want to bring the rich down, I want to bring everyone else up,” he said. “However, this is an irony that the people who need it the least often get free food wherever they go, but we still make it extraordinarily difficult for people to obtain government food benefits.” In September, the U.S. Department of Agriculture reported that about one out of every six Americans, or 14.5 percent of the population had trouble coming up had trouble coming up with enough money to buy food at some point in 2010. With comedian Ricky Gervais once again ready to rip everyone to shreds, we wonder if the award’s extravagant meal will be on his list of targets to take down. The entire menu for Sunday night’s 69th annual Golden Globe awards:

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Activists Outraged As Celebs Dine On Gold (PHOTOS)

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TSA Made $400K Off Loose Change In 2010

by Stephanie Marcus on January 14, 2012

Huffington Post…

You double checked you have your keys, but did you remember to take your loose change? Plenty of travelers seem to forget the couple of coins that were floating in their pockets, and it makes the Transportation Security Administration hundreds of thousands of dollars richer every year. In 2010, travelers left behind a whopping $409,085.56. That’s $376, 480.39 in pennies, nickels, dimes, quarters and dollar coins, plus $32,605.17 in foreign currency, according to USA Today . Hurried travelers should know the coins they leave in haste don’t become tips for the security agents, rather Nico Melendez, a spokesperson for the TSA told NBC San Diego , the money left in plastic bins is put in a jar and at the end of each shift they take it, count it, and send it to the finance office. The collected cash goes into the TSA’s general operating budget and is spent on general expenses — everything from technology to lightbulbs — since Melandez says they never know how much money people will leave behind each year. But surprisingly, the numbers have been fairly consistent with $364,000 left in 2008 and $399,000 left in 2009, reports NBC San Diego. Of course, the TSA does make the effort to get money back to travelers. On Jan. 11 a TSA screener turned in $5,000 cash that he found on the floor at Newark Liberty International Airport. Because the cash was found near the United Airlines Elite Access check-in desk and not left in a plastic bin, the screener handed it over to the airline, who said the money will go to charity if no one claims it. Still, there are those who aren’t happy with the TSA keeping your forgotten cash. The Los Angeles Times reported that legislation has been introduced by Rep. Jeff Miller (R-Fla.) to give the money to the USO — a non-profit that aids the country’s troops and their families — for its airport programs in support of the military. And the director of the Consumer Travel Alliance agrees. Charlie Leocha told the LA Times , “Any use of the money by the TSA seems distasteful. It’s not their money. In fact, it is money left by harassed passengers and should certainly not go to the TSA as a reward for invasive searches.”

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TSA Made $400K Off Loose Change In 2010

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REPORT: FTC To Probe Google+ In Antitrust Investigation

January 13, 2012

Another of Google’s many web properties may come under scrutiny in an ongoing antitrust investigation by U.S. regulators. According to Bloomberg , the FTC’s probe into Google’s business practices will expand to burgeoning social network Google+. The news comes days after Google announced that its search engine would include public data from Google+ in search results . Though Bloomberg cited people familiar with the investigation , neither an FTC spokeswoman nor a Google rep would comment. The FTC currently is looking into allegations that Google, the largest search engine by market share in the U.S., favors its own products in search results . As a result of a settlement reached with Google in March 2011, the FTC is also authorized to order third-party audits of Google’s privacy practices once every two years for the next 20 years. On December 10, Google announced a new search feature, ” Search Plus Your World ,” which allows the search engine to pull data from users’ connections in Google+ to make searching the web an increasingly personalized experience. By December 12, the Electronic Privacy Information Center (EPIC) had filed a letter of complaint with the FTC raising concerns about the new feature’s effect on competing web services. EPIC also stated in its letter that the FTC should look into the implications “Search Plus Your World” could have on users’ privacy.

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WATCH: Fox News Host’s Bizarre Mockery Of Occupy Wall Street

October 15, 2011

Fox News host Eric Bolling found a new way to mock the Occupy Wall Street protesters on Friday’s episode of “The Five.” Bolling wore a tin-foil hat and nerdy glasses, and held a sign reading “Occupy The Five.” The gesture seemed to go down well with most of Bolling’s colleagues, who chortled appreciatively at his lampoonery and played video of what they felt were stupid protesters in the movement. Co-host Andrea Tantaros chimed in, saying that the protesters never brushed their teeth. Greg Gutfeld added that he didn’t see any point to Occupy Wall Street. Co-host Bob Beckel was not so amused, though, telling Bolling he should be “embarrassed” for his family. Occupy Wall Street has not exactly been met with joy and approval at Fox News. Ann Coulter compared the protesters to Nazis during an appearance on the network’s sister business channel, and Bill O’Reilly called them “crackheads.” The movement has returned the favor, criticizing Fox News in interviews and shouting down its hosts when they have made the trek to the Lower Manhattan encampment. WATCH: Watch the latest video at video.foxnews.com

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GM Pulls Ad That Makes Fun of Cyclists

October 15, 2011

Is riding a bike really that lame? General Motors would like you to think so, or at least they did until pulling an advertisement targeted at college students. The ad, seen here on Urban Velo , depicts a man on a bicycle being passed by an attractive woman in a car, with the headline “Reality Sucks.” The ad ran in a number of college newspapers and as a poster on college campuses, offering a college student discount on several GM models, according to the Los Angeles Times . The Los Angeles Times reported that Tom Henderson, a GM spokesman, said: The content of the ad was developed with college students and was meant to be a bit cheeky and humorous and not meant to offend anybody. We have gotten feedback and we are listening and there are changes underway. They will be taking the bicycle ad out of the rotation…. We respect bikers and many of us here are cyclists. General Motors has been using social media to apologize to offended consumers. For several days, the company’s Twitter feed has been filled with messages to users who have complained. Bicycle manufacturer Giant released a parody of GM’s ad, suggesting that if you ride a bicycle, ” The only thing you have to lose is some weight.. and the burden of fuel prices.” ABC News reported on the comments one UCLA professor made on a cycling website about the ad. He said, “GM, the company that required us taxpayers to bail it out in 2009, is now biting the young people who bear and will bear the environment and health damage of its gas swilling ways.” Click here to view of some of the most attention-grabbing advertisements in recent memory.

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Dan Solin: Real Financial Experts Won’t Go on TV

August 23, 2011

If you were going to make a list of the smartest people alive in finance, you would want to consider these candidates: 1. Gene Fama : The Robert R. McCormick Distinguished Service Professor of Finance at the University of Chicago Booth School of Business. Prolific author of many peer reviewed financial articles and textbooks. The father of the efficient market hypothesis. 2. Ken French : The Roth Family Distinguished Professor of Finance at the Tuck School of Business at Dartmouth College. He is an expert on the behavior of security prices and investment strategies. He and Gene Fama are co-authors of numerous articles, including “The Cross-Section of Expected Stock Returns” and “Common Risk Factors in the Returns on Stocks and Bonds.” Fama and French are often mentioned as candidates for the Nobel Prize. Fortune Magazine included Fama and French in a list of the “smartest people alive in finance.” 3. David Swensen : The chief Investment Officer at Yale University, responsible for managing endowment assets of more than $16 billion. Author of the excellent financial book, Unconventional Success, A Fundamental Approach to Personal Investment. 4. William Bernstein : A neurologist with a PhD in chemistry, who taught himself finance. He is the author of many classic financial books, including The Intelligent Asset Allocator . Bernstein is generally considered to be one of the leading financial theorists in this country. 5. Robert Ibbotson : Professor of Finance at Yale School of Management and co-author of Stocks, Bonds, Bills and Inflation , which is the standard reference for information about investment market returns. I am sure there are other worthy candidates but few would quarrel with this list. They all have one surprising thing in common: You won’t see them on TV explaining market volatility, predicting the direction of the market or telling investors when to enter or exit the market. Why do these real experts refuse to go on TV? David Swensen gave us an insight into what he would say in a recent article in The New York Times . He has little confidence in the mutual fund industry, noting that it “…has employed market volatility to produce profits for itself far more reliably than it has produced returns for its investors.” He has less regard for brokers and advisers, noting that: “Most understand too little about financial markets to make informed decisions, intervene too frequently in counterproductive ways and gather too little information about portfolio holdings to evaluate results.” He advises individual investors “…to embrace low-cost index funds and shun the broker-driven churning of high-cost, actively managed funds.” I wanted to stand up and applaud. This is information the financial industry doesn’t want you to know. The guests on these shows primarily are from the mutual fund industry or are advisers who recommend actively managed funds — precisely those who Swensen rails against. The other “smartest people” would not differ from Swensen. The financial media understands their views would be good for investors, but bad for ratings and for their securities industry advertisers. Keep this in mind the next time you watch a self-anointed “expert” explain what investors are thinking today, or why the market did what it did. You are getting the views of those in the minor leagues, who share an agenda to keep you confused, trading, relying on them and buying their products. The smartest people alive in finance refuse to participate in this charade. Dan Solin is a Senior Vice President of Index Funds Advisors (ifa.com). He is the author of the New York Times best sellers The Smartest Investment Book You’ll Ever Read , The Smartest 401(k) Book You’ll Ever Read , and The Smartest Retirement Book You’ll Ever Read . His new book, The Smartest Portfolio You’ll Ever Own , will be released in September, 2011. The views set forth in this blog are the opinions of the author alone and may not represent the views of any firm or entity with whom he is affiliated. The data, information, and content on this blog are for information, education, and non-commercial purposes only. Returns from index funds do not represent the performance of any investment advisory firm. The information on this blog does not involve the rendering of personalized investment advice and is limited to the dissemination of opinions on investing. No reader should construe these opinions as an offer of advisory services. Readers who require investment advice should retain the services of a competent investment professional. The information on this blog is not an offer to buy or sell, or a solicitation of any offer to buy or sell any securities or class of securities mentioned herein. Furthermore, the information on this blog should not be construed as an offer of advisory services. Please note that the author does not recommend specific securities nor is he responsible for comments made by persons posting on this blog.

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Georges Ugeux: Could Europe Provoke a World Crisis?

August 23, 2011

For the past few weeks, I have been observing reactions (from all sides) about Europe’s debt crisis, and its responsibility for the U.S. market decrease. It has made me wonder: could a worsening of the European crisis drag the United States and the world into a catastrophe worse than the 2008 collapse of Lehman Brothers? The European sovereign debt crisis has far-reaching implications: if it were only Greece, or even Portugal and Ireland, it would probably have a limited impact. Unfortunately, the contagion of other countries seems to be spreading to Spain and Italy. The market reaction to rumors of a possible downgrading of France’s sovereign debt rating in August showed how sensitive world markets would be to such an event. The brave attempts of the European summit of July 21 and the Sarkozy-Merkel meeting of Aug. 8 were lacking in both substance and action, and investors were deeply disappointed. The credibility deficit of the European leadership seems insurmountable at this point, as their statements and subsequent actions are simply contradictory The European banking situation is much more troubling. It is actually scary. The largest Eurozone banks lost between 30 and 50 percent of their market capitalization since July 1. Since the July 21 summit that was supposed to have resolved the European crisis, Eurozone banks lost the following: A risk of European economic recession is not excluded. France and Germany announced a zero growth rate for the second quarter, and Greece is currently suffering from a 5-percent recession. The combination of these three factors explains the apprehension of investors and capital markets toward Europe. Although it is a European problem, could it create issues outside Europe? The most immediate risk is through the banking system. Should the current banking situation lead to a liquidity crisis, we would revert back to August 2007, when banks no longer trusted one another. The interbank financing reached unbearable levels of interest rates at that time, and Central Banks were the only substantial liquidity provider. What ammunition would be available to counter such a crisis? The Federal Reserve and the European Central Bank are not in the same position as in 2007. Both have grown their balance sheets at record levels. The assets they hold are not all of prime quality. Their situation is far from being as solid as it was four years ago. Last but not least, at the current levels of indebtedness, government financing is no longer available for bailouts. In Europe, the guarantees of the European Fund of Financial Stability are increasing the indebtedness of the guarantors: 37 percent of those guarantees are granted by Italy, Spain, Portugal and Ireland, who themselves are in difficulty. The importance of France (20 percent) and Germany (27 percent) as guarantors is therefore crucial. Unfortunately, the French indebtedness (82 percent of GDP) and budget deficit (7 percent in 2010) make its own creditworthiness vulnerable. This short review of the European situation cannot hide the risk of further deterioration. European countries ought to make serious improvements to their fiscal situations in their 2012 budgets. Their failure to do so would not only aggravate the European decline but start a new global crisis. Will they have the courage and the consensus to do so? Based on the last 18 months of Greek crisis, one is allowed to have doubts.

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Head Of S&P To Step Down

August 23, 2011

NEW YORK — The president of Standard & Poor’s is stepping down, a decision coming only weeks after the rating agency’s unprecedented move to strip the United States of its AAA credit rating, according to reports published Monday. The Financial Times and The Wall Street Journal reported that Deven Sharma will stay on as an adviser to S&P’s parent company, McGraw-Hill Cos., until the end of the year. They said S&P plans to make an official announcement Tuesday before the U.S. financial markets open. The newspapers cite people familiar with the matter who say Sharma’s move was in the works well before S&P downgraded its rating on the U.S. to AA-plus on Aug. 5. The Financial Times also said Sharma’s decision to leave S&P was not due to recent reports that the Justice Department was investigating whether the agency improperly rated dozens of mortgage securities in the years leading up to the financial crisis in 2008. It said the move is the result of S&P splitting its data, pricing and analytics business from its ratings business. Messages were left with S&P spokesmen seeking comment. S&P’s downgrade sent shock waves through global financial markets and was sharply criticized by the Obama administration, which said the agency’s analysis was fundamentally flawed. Other major rating agencies have not followed S&P’s lead. Sharma joined S&P in 2006 and was named president the following year. Before that, he was executive vice president, Global Strategy, at McGraw-Hill for five years.

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Goldman Shares Fall On News Of CEO Hiring Top Defense Lawyer

August 23, 2011

NEW YORK — Goldman Sachs shares fell sharply Monday following news that its CEO, Lloyd Blankfein, has hired a top Washington defense lawyer. Blankfein and other top executives at Goldman Sachs Group Inc. are facing inquiries from the Justice Department and other agencies on the firm’s practices leading up to the financial crisis. Goldman confirmed a report from Reuters that Blankfein has retained Reid Weingarten from the law firm Steptoe & Johnson LLP. Weingarten is known to have represented top corporate executives who have been charged with wrongdoing including former WorldCom chief Bernard Ebbers. Weingarten’s office didn’t immediately respond to requests for comment. Goldman Sachs said in a statement: “Blankfein and other individuals who were expected to be interviewed in connection with the Justice Department’s inquiry into certain matters raised in the (Senate’s Permanent Subcommittee on Investigations) report hired counsel at the outset.” Goldman paid $550 million in July 2010 to settle a lawsuit filed by the Securities and Exchange Commission that accused the firm of creating and selling mortgage securities investment that were designed to fail. In April, the Senate’s Permanent Subcommittee on Investigations released a report that said Goldman “misled” its clients and Congress. The report said bank profited from betting billions of dollars against the subprime mortgage market and then misled Congress during testimony in 2010. The Justice Department launched an inquiry shortly thereafter. Goldman’s shares fell 4.7 percent to $106.51. Most of the losses happened in the last 15 minutes when the news was first reported by Reuters.

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Natural or Relaxed, For Black Women, Hair is Not a Settled Matter

August 4, 2011

ATLANTA — All month, Sharee Bryant had been hearing women talk about hair. She’d overheard two women in a grocery store checkout line talking about a $62 shampoo and conditioner combo designed for black women who had decided to forgo chemically straightening their hair. She’d heard a woman at her church questioning why so many of the young women in the pews had the temerity to show up with their hair in it’s natural texture — curly, kinky or somewhere in between. And, she had read online about the black women driving from places as far away as Arkansas and Chicago to the Spring World Natural Hair Show in Atlanta. So, by the time Bryant — an Atlanta-area insurance agent who’s taken to wearing her natural hair coiled into Bantu Knots since cutting off her chemically relaxed bob last year — stood in a 35 minute line outside the late April hair show, she had a list of the products she wanted to touch, sample and smell. Still, what Bryant, 34, heard next took her by surprise. “Go to the beach. Go to the club. Wherever you want to go this summer. Ladies, what you need is a Prota Organic Weave,” a rail-thin woman equipped with a Janet Jackson-style headset microphone announced from a booth near the front of the sprawling exhibit space. “Let it blow in the wind. That’s right shake it.” “You can have the man you want, the life you want, ladies,” the woman continued. “Change your look up today for $15. I can change your life for $15. Right here, we’ve got what you need, organic weave.” The pitch wasn’t just persistent — it had deeper resonance. For black women, how they wear their hair is complicated by a deep well of personal, social and commercial interests. Despite a record-one year decline in chemical hair relaxer sales and a boom in beauty products, websites, blogs and YouTube channels aimed at black women with natural hair , the conversation around black hair is anything but closed. In 2011, the question of when and why so many black women chemically relax their hair or go natural remains fraught and very much open. “I really feel like this may be the year that the natural finally went mainstream,” said Bryant, before pursing her lips and taking one of those deep, stay-calm breaths. Prota’s pitch woman was doing her thing just a few feet away from a table where Bryant had stopped to inspect a 6 oz., $27 jar of curl cream. “I’m really kind of surprised — maybe even a little offended — that weave woman is here. As far as I’m concerned, she’s like a money changer in the temple.” In early part of the 20th century, a black beauty products operation created by Madam C.J. Walker made her the nation’s first black millionaire. Today, black hair care products make up a nearly $10 billion industry, according to industry data. But in the last two years, chemical hair relaxer sales — made mostly to black women — have dropped 12 percent, according to Mintel, a consumer spending and market research firm. “In this business, that’s a big dip, a very, very big dip,” said Kat Fay, a senior beauty personal care analyst at Mintel. “Of course, those years do coincide with the recession. And we know that it can be expensive to maintain a relaxer or a weave. But there are some real indicators that something else, something related to the growing popularity of natural hair and a paradigm shift away chemicals may be taking hold here.” The sight of black women with curly, kinky and Esmeralda Spalding-sized hair has grown so common, that in July, CNN published a sort of natural black hair etiquette guide on its website. The story explored white curiosity about black women’s natural hair and the historical and cultural reasons why touching a black woman’s hair without invitation is rude. But black hair — the hefty price tag of a single hair weave (sometimes more than $1,000), the harsh chemical make up of hair relaxers and why millions of black women spend time and money to get and maintain them — might have remained almost exclusively a conversation between black women if it were not for Chris Rock, Fay said. In 2006, Rock and HBO films produced the documentary, Good Hair. In it, Rock used his characteristically comical approach to explore a serious set of questions about black women and why straight, long hair remains the prevailing beauty ideal. The movie also put a new phrase in the national vernacular when several women interviewed for the documentary called chemical relaxers, and the devotion they inspire, “creamy crack.” ( Watch the trailer and explanation of the phrase creamy crack ). On screen, Rock explained that the movie had been inspired by his young daughter’s question about her natural hair. Rock’s daughter asked him why she didn’t have, “good hair.” The cultural weight and social value of straight hair is very strong, and Fay is not aware of a single company that has stopped producing relaxers, despite the sales declines. But some of the world’s largest and best-known black hair companies, such as Bronner Brothers and L’Oreal-owned Mizani, which built their reputations on relaxers, have also started producing natural hair product lines, said Michelle Breyer, one of the owners and founders of NaturallyCurly.com, an off line beauty industry market research company and online discussion and retail space that caters to women (of all races) with curly or kinky hair. Both Bronner and Mizani were at the Atlanta hair show with staff in place to not just hand out samples, but apply them to would-be customer’s hair, discuss the results and advise the displeased. Today, there are stores that have entire sections of products dedicated to curly hair, Breyer said. And the practice of planting black hair care products on one aisle and everything else aimed at everyone else on another is disappearing even in a lot of chain stores. All sorts of companies are even adopting some of the styling language — wash and go, twist set and braid out to name a few — for their packaging that is common to the online discussion spaces and blogs where black women review how to care for natural hair. “Hair has incredible social significance,” said Nowlie Rooks, author of the book, “Raising: Beauty, Culture and African American Women.” Rooks is also the associate director of Princeton University’s Center for African American Studies. “Think about the obsessive level of attention men loosing their hair give that process. In some cultures people shave their hair as an act of mourning. For African American women, wearing one’s natural hair was just not socially acceptable for the longest time.” Perhaps no one knows this better than Alicia Nicole Walton, the writer and psychotherapist behind CurlyNikki.com, a natural hair care blog. Curly Nikki’s blog stands out in the sea of online voices talking about the decision to “go natural” and the care and maintenance of natural hair. Walton does more than just evaluate products, she pays to the emotional and social issues that surround black women’s hair in a regularly occurring series of posts written by Walton and guest writers called On the Couch . Walton grew up in a home where chemical hair treatments were banned because of an experience that her father had with “a bad Jehri Curl ,” she said. But in college, Walton had a harder time getting to a salon to have her hair temporarily straightened with a heated straightening comb. Then, she damaged her hair when she used a flat iron, another temporary heat straightening method, too often at home. Her boyfriend — now husband — pointed out that Walton’s moods, even her self-esteem seemed to rise and fall around the appearance of her hair. When it was straight, Walton was up. When it was not, Walton was down, he said. Walton decided this wasn’t emotionally healthy and began experimenting with wearing her hair in curly and braided styles. Her father wasn’t pleased. “He said, ‘please don’t sacrifice your career for this hair choice,’ ” Walton said. “‘How will you get a job or get into graduate school with that hair?’ But that was the thing, what I was doing wasn’t really a choice, like dying your hair pink. This is what grows out of my head.” For older African Americans, natural hair or appearing in public with one’s hair un-straightened can seem a lot like going somewhere without pants, Walton said. But concerns for many younger African Americans. In 2010, NaturallyCurly.com purchased Walton’s blog for an undisclosed amount. “Let’s just say that my husband and I don’t absolutely have to work,” said Walton, a new mother who hopes to establish a therapy practice for women with body image and self-esteem issues. Choosing a natural hair style in the 1970s often conveyed a political message, Walton said, citing Angela Davis’ afro. But in the hair show, packed into 75,000 square feet in the Georgia International Convention Center, the politics of natural hair seemed to take a backseat to commercial interests. During the two-day event, thousands of black women approached sales staff — black and white — for advice about their hair. White-owned companies continue to dominate sales, but many of the small- to medium-sized black-owned companies are trying to infiltrate the market. And, most of the black start-up owners interviewed for this story view white women with curly hair as the next customer frontier that will help their businesses continue to grow. But there are also plenty of signs that natural hair has yet to become completely socially acceptable. Each year, a number of workplace discrimination suits are filed related to African Americans wearing their hair in its natural state, dreads or braids, said Rooks. In 2007, a Glamour Magazine editor told a group of female attorneys gathered for a session on corporate fashion dos and don’ts that natural hair, more specifically afros, dreads and other “political” hair styles were an absolute don’t. Glamour magazine declined to identify the editor, but it wound up apologizing to its readers and the law firm. The unidentified editor in question has, according to a statement released by Glamour, resigned. And then there is the way that some people have responded to 13-year-old Malia Obama’s hair. When Malia Obama accompanied her mother, First Lady Michelle Obama, abroad in 2010, she wore her hair in a series of two-stand twists that were left coiled for most of the trip. The Free Republic, online message boards for political conservatives, temporarily disabled comments related to the trip because of statements made by readers describing Malia Obama and her hair in terms such as “typical ghetto trash.” Several questioned whether her appearance was suitable to represent the United States abroad. Natural black hair remains such a charged issue that late last year when Sesame Street’s white head writer, Joey Mazzarino, wrote a short musical skit for his adopted Ethopian daughter, he created a sensation. Mazzarino’s daughter had made it clear that she wanted long, blonde, bouncy hair, he said. The song Mazzarino wrote in celebration of natural black hair and then assigned to one of the show’s puppets, “I Love My Hair” went viral. To date, it has drawn more than 2.5 million hits on YouTube, and provoked mashups , innumerable blog entries and a call from an African American woman who told Mazzarino that the song moved her to tears. “Natural hair is not quite a stigma at this point, but there can be risks,” said Rooks. At the natural hair show, there were dozens of women in line at the Miss Jessie’s mobile salon space and more watching product demonstrations at the foot of its stage. There was a line that stretched 42 women deep at the shop set up by Uncle Funky’s Daughter, another well-known beauty product lines aimed at women with curly or kinky hair. While they waited, some posed for pictures with the company’s logo — a black woman with a shoulder-grazing Afro. And the scene around the Hair Rules booth looked something like a crowded bar. Dozens of women were trying to get the staff’s attention, waiving money, shouting questions and requests over other customers’ heads. But whether it was the product, the company’s Beyonce-look-alike model or the pitch woman’s ability to make the late infomercial star Billy Mays seem soft spoken, the Prota Organic weave booth also drew a small crowd. One person who went nowhere near the Prota display was Yaisa Strickland. Strickland, an attorney in Washington, D.C., cut off her mid-back length relaxed hair last year after her sister convinced her that they should both eliminate chemical straightening. When she did it, Strickland was unsure she would be able to live with the look or amount of natural hair left on her head. So she did her “big chop” in Atlanta, the “weave capital of the world,” as Strickland said. If she’d felt awkward after her big chop, she was sure that she could find a talented hair stylist somewhere nearby to attach a weave. But when it was done, Strickland liked what she saw. She could really see her face. There would be no hiding behind a shroud of hair. And, there was something else. “I know that sounds dramatic, but I used to spend six to eight hours once at least once a month in the salon,” said Strickland, who wears a modern curly take on the afro that natural hair care enthusiasts often call a TWA — the teeny weeny afro. “I used to have to plan when and how I was going to exercise because you know you don’t want that straight hair that you’ve invested in to get wet off schedule. But since I cut my hair, I’ve told people, you could be living instead of spending half your life and your budget on your hair. I really can not imagine going back.”

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Why Colleges Should Help Students Minimize Private Loan Use

July 13, 2011

Halfway through her junior year of college, Crystal Nance suddenly needed to come up with $15,000 in order to graduate. While federal loans covered Nance’s tuition and fees, she resorted to private loans to pay for the rest. All told, Nance, now 23, borrowed $60,000 to finance her public relations and sociology degree from Drake University. “My mom is still paying off her master’s degree — and that’s from 10 years ago,” she said. Nance works as a parent and family services coordinator at Northern Arizona University, where she is also enrolled in graduate school. “Am I going to be paying off these loans until I die?” As a graduate student, Nance can defer paying back her federal loans until she’s out of school. Meanwhile, the high interest on her private loans continues to accrue. While she doesn’t have any regrets, she now realizes she could have made a more informed choice. Nance views her private loan from Wells Fargo as a “last resort option” — and with proper guidance, it’s a decision she might have avoided. According to a new report released earlier today by the Project on Student Debt at the Institute for College Access and Success , an independent, nonprofit organization that works to make higher education more affordable, colleges can play a significant role when it comes to reducing their students’ reliance on private lenders. “The majority of undergraduates who borrow with private loans could have borrowed more in federal loans, putting students and their families at unnecessary — and at times extreme — financial risk,” said Lauren Asher, president of the Institute for College Access and Success and co-author of the report. “Colleges play an important role in students deciding how to pay for college,” Asher said. “We wanted to identify what colleges are doing to help students make informed decisions about this type of loan and avoid unnecessarily risky borrowing.” While federal loans allow for income-based repayment and loan forgiveness for public service, private student loans deny any such leeway. Aside from forgoing flexible repayment options, private loans typically also come with uncapped, variable interest rates that are often highest for those than can least afford them. They also cannot be discharged in the event of a bankruptcy. Private loans cannot even be discharged in the case of death. “Federal loans follow you to the grave but private loans follow you both to and past the grave — you can never escape it,” said Asher. Currently, the average college student graduates with $27,200 in debt, according to Mark Kantrowitz. He publishes the financial aid websites Fastweb.com and FinAid.org , and believes that total debt at graduation should not exceed a graduate’s starting salary. All too often, Kantrowitz sees students relying upon risky private loans when public funds are still available. Private loan borrowers currently account for 14 percent of all undergraduates — nearly 3 million students. Using data from 2007-2008 National Postsecondary Student Aid Study, he found 1.8 million students either not borrowing the full federal limit or forgoing federal aid entirely, and opting instead to take out private student loans. Kantrowtiz sees schools playing a critical role in the information-gathering process. “Lenders of private student loans are advertising and they’re advertising aggressively,” he said. “They get their foot in the door first. Schools have to do their best to circumvent that by intervening and intervening early.” But how much of the responsibility should be placed on the institutions themselves? “There’s an ongoing debate among financial aid administrators about how much of this is really our duty, our obligation,” said Deanne Loonin, an attorney and the director of the National Consumer Law Center’s Student Loan Borrower Assistance Project. “Whether or not there’s a legal obligation, this has to do with self-preservation, and when schools make it enough of a priority, it can make a really important difference.” The report applauds numerous schools that rigorously counsel students against the dangers of private loans. Barnard College, for instance, recently reduced private borrowing by up to 75 percent after employing such intervention tactics. Kathy Blaisdell, the director of student financial services at Mount Holyoke College, personally calls every student who wants a private loan certified by the school. After peppering them with questions about maximizing federal eligibility, interest rates and loan terms, Blaisdell finds that “most students didn’t have a clue.” Such tactics commonly result in half of those contacted changing some part of their private lending plan, a figure Blaisdell views as a tremendous victory. But such one-on-one interventions aren’t limited to small, liberal arts colleges. For Youlonda Copeland-Morgan, associate vice president for enrollment management and director of scholarships and student aid at Syracuse University, teaching students financial literacy is her personal mission. The school recently pioneered an approach to helping students pay off existing private student loan debt while still enrolled in school. Syracuse offered grants for up to $10,000 a year in exchange for two hours of financial literacy training each semester. “We need to make sure we’re graduating our students and protecting their credit scores and helping them to make wise decisions,” said Copeland-Morgan. “We don’t want them to leave here in so much debt that they can’t pursue the career of their dreams.”

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JPMorgan Chase Gets Dismissal Of Madoff Conspiracy Lawsuit

July 7, 2011

NEW YORK (Jonathan Stempel) – A federal appeals court threw out a lawsuit accusing JPMorgan Chase & Co of violating U.S. racketeering law by conspiring with Bernard Madoff to further his Ponzi scheme. Thursday’s decision, in a case brought by a Florida partnership that invested with Madoff, came less than two weeks after the trustee seeking money for Madoff victims separately filed an amended $19.9 billion lawsuit against JPMorgan, accusing it of enabling Madoff’s fraud and ignoring red flags. The trustee, Irving Picard, is trying to use the same racketeering law to recover as much as $58.8 billion from dozens of European defendants in his largest Madoff lawsuit. In Thursday’s decision, the 2nd U.S. Circuit Court of Appeals of New York rejected an allegation by MLSMK Investment Co that JPMorgan violated the Racketeer Influenced and Corrupt Organizations Act (RICO) by conspiring with Madoff to “fleece” customers, and failing to freeze his accounts. MLSMK, based in Palm Beach, Florida, said it lost its $12.8 million investment with Bernard L. Madoff Investment Securities LLC when Madoff was arrested on December 11, 2008. It sought to hold JPMorgan liable for conspiracy under RICO, which allows treble damages, by aiding and abetting Madoff’s fraud. But Judge Robert Sack, writing for a three-judge panel, said a federal ban on civil RICO claims based on securities fraud also covers aiding and abetting claims. “As the plaintiff concedes,” he wrote, “the purpose of the bar was to prevent litigants from using artful pleading to bootstrap securities fraud cases into RICO cases, with their threat of treble damages.” District Judge Barbara Jones had dismissed MLSMK’s RICO claim on different grounds. The 2nd Circuit had on June 6 also upheld her dismissal of four New York state law claims. APPEAL POSSIBLE “The circuit essentially said aiders and abetters of securities fraud have a free pass, because plaintiffs cannot sue them for securities fraud or RICO,” Howard Kleinhendler, a partner at Wachtel & Masyr representing MLSMK, said in an interview. “I don’t think that’s a correct result, or what Congress intended.” He said his client may appeal to the U.S. Supreme Court. Patricia Hynes, a partner at Allen & Overy representing JPMorgan, called the decision “a very important ruling.” She said it resolved a split of opinion among judges in the 2nd Circuit, and makes clear that plaintiffs cannot do an “end run” around laws barring RICO claims based on securities fraud by presenting their claims differently. Picard filed his $58.8 billion lawsuit against dozens of defendants including Austria’s Bank Medici AG, its founder, Sonja Kohn, and Italy’s UniCredit SpA. He alleged $19.6 billion of damages, which could be tripled under RICO. Thursday’s decision “could be problematic for the trustee” in that case, Kleinhendler said. A spokeswoman for Picard had no immediate comment. A UniCredit lawyer declined to comment. Picard has filed roughly 1,050 lawsuits on behalf of Madoff victims to recover more than $103 billion. Madoff, 73, is serving a 150-year prison sentence. The case is MLSMK Investment Co v. JPMorgan Chase & Co et al, 2nd U.S. Circuit Court of Appeals, No. 10-3040. (Editing by Steve Orlofsky) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Chez Pazienza: Professor Koch’s Psychopathy 101 Class

May 12, 2011

Just a couple of days ago I was mentioning to someone how Bret Easton Ellis’s American Psycho inadvertently turned out to be the single best chronicle of the entire ethos of the 1980s. What was initially repudiated as relentlessly ugly, hyper-violent nihilism has, in hindsight, taken on a strange air of both sly subversiveness and surprising prescience. What makes American Psycho so subversive is that it imagined soulless consumption and craven materialism taken to its seemingly inevitable conclusion. Patrick Bateman was what you would get if you removed all societal and moral restraint and left only the gooey center buried deep within our rapidly dissolving culture. What makes it prescient, however, is that it imagined a Wall Street populated by indifferent monsters willing to literally kill to get what they want. True, the barons and minions of today’s Wall Street don’t connect car batteries to people’s genitals or scoop out their eyes with pen knives (as far as we know). But if you’ve ever seen the documentary The Smartest Guys in the Room , about the rise and fall of Enron, and listened to recordings of commodities traders laughing to each other at the prospect of the elderly going broke and California burning up as they strangle the state’s power supply in the name of huge profits, you know that there are more subtle forms of sadism. I bring this up because another conversation I had this past weekend was with a friend of mine who represents Howard Dean’s group “Democracy for America” and she was rightfully complaining about the need for our nation’s MBA programs to begin putting more emphasis on business ethics. And two days ago the St. Petersburg Times highlighted how one business school, Florida State University’s, is coming under fire for a move that could very well be in exactly the opposite direction. Apparently, a few years back, billionaire tool Charles Koch donated around $1.5 million to the FSU economics school in exchange for, well, control of the FSU economics school — or at the very least the ability to decide which professors it hires. The goal, ostensibly, would be to ensure that the school does its part to foster his specific brand of free-market libertarian capitalism well into the next few decades. Think of it as Professor Xavier’s School for Randian Supermen, with Koch himself playing the role of Mentor X and choosing the actual professors. This is a disconcerting enough scenario; the fact that this is happening at a public university — funded, ironically, by taxpayers — is just all kinds of unscrupulous. And a lot of people are now starting to realize this. In 2009, Koch and his representatives used their bought-and-paid-for veto power to shoot down 60% of the faculty suggestions, at least a few of whom presumably lacked the conservative credentials that would’ve made Koch comfortable that he was getting his money’s worth. The draconian contract FSU entered into with the Charles G. Koch Charitable Foundation set up an advisory panel appointed by Koch himself, and that panel alone decides which candidates for various professorships deserve consideration. Oh, and the Sword of Damocles hanging over the university’s head? Koch can immediately pull all funding from the school if he doesn’t like who gets hired or if he finds, during his foundation’s annual reviews, that they’ve failed to live up to his “expectations.” This is what’s happening out there — what’s being allowed to happen. A very rich guy is essentially buying the kind of education he thinks your kids should have — one that he assumes will benefit him and his anti-interventionist ilk by turning them into new recruits to the cause. Koch’s plan is brilliantly creative: to go to the source and begin indoctrination from the very beginning — to not simply sell students a product but to make them become both the product and the salespeople at the same time. Forget ethics — Charles Koch is personally cranking out the next generation of Patrick Batemans. Better check the floor around you and make sure you’re not standing on plastic.

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Raymond Schillinger: Revisiting Florida’s ‘Foreclosure Ground Zero’

April 4, 2011

Last week, I returned to Southwest Florida for the screening of my documentary film, Dreams for Sale: Lehigh Acres & the Florida Foreclosure Crisis , as part of the lineup at the inaugural 2011 Fort Myers Film Festival. The trip was one of mixed emotions. While I was elated to present the film in the area I had originally visited for principal shooting almost 2 years ago, the sobering reality of Lee County’s dismal improvement from the 2006-2008 nadir of the foreclosure crisis tempered my excitement. Lee County, with its numerous sprawling, foreclosure-ridden suburban communities, has been at the unfortunate center of attention ever since the housing boom came to a screeching halt partway through 2006. The area has frequently earned the unwanted title of “foreclosure ground zero,” and it is regularly thrown in with lists of other hard-hit economic fallout zones such as Las Vegas, Phoenix, parts of California, and the upper Midwest. Back in 2009, when shooting Dreams for Sale , a few brave experts were suggesting that the bottom had already been reached and that recovery was just around the corner. And yet, two years later, the economic outlook in the hardest hit areas of the crisis remains grim. Although the national employment rate is beginning to tick upward , regional and local economies that were largely driven by construction and real estate (e.g. Lee County) will likely be last in line to see a measurable improvement. In the meantime, segments of these communities remain veritable ghost towns , with half-built homes and tattered foreclosure notices lining the grids of paved asphalt. Recent statistics are hardly encouraging: nearly 1 in 3 homes in Lee County remain unoccupied , while home prices continue to sink to nearly pre-2000 levels. And although new foreclosure filings are markedly down from their 2008-2009 peak levels, the best reason experts can seem to give for the drop-off is merely that lenders have become more cautious in their filings due to criticism of their due diligence methods. Other experts still warn about a “shadow inventory” of millions of homes and commercial properties that are flirting with foreclosure and could trigger a colossal downward slide in values at any moment. Individual stories of recovery, however, can be found amid the rubble of half-built homes and faded “For Sale” signs. At the screening, I met up with a woman who had recounted her heart-wrenching story on camera back in 2009: back then, she owed over $250,000 on her home and owed thousands more from a failed coffee shop venture. In two years, she finally managed to move out of Lehigh, obtain a well-paying government job and begin to pay down her debts. Other hopeful stories are undoubtedly out there, but the stagnant condition of the overall economy remains troubling. One can only hope that the severity and breadth of the recent bust will give caution to future investors and force us to impose more responsible guidelines and regulations on our financial institutions. Unfortunately, if history is any guide, this almost certainly will not be the case. To watch Dreams for Sale in its entirety for a limited time, visit the official page and select the “Full Version” tab.

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John Farr: Analysis of a Meltdown: Why Everyone Should See Inside Job

March 13, 2011

As an outspoken critic of this year’s Oscars, I’m happy to note they got one thing right: Inside Job won the award for Best Documentary feature. As of last week, this first-rate expose of the root causes behind the 2008 financial meltdown became available on DVD. Rarely do I resort to exhortations like this, but here is a movie that every adult American should watch, digest, and discuss… then maybe watch again. Its impact speaks to the unique power of film to relate a compelling story in under two hours, and have it hit you like a sledgehammer. Like many others, to deal with my own bewilderment in the wake of this crisis, I had consumed Andrew Ross Sorkin’s much-praised book Too Big To Fail , and came away with a somewhat better understanding of what had gone down. (I also felt oddly guilty that the book read like a thriller.) Inside Job is not thrilling per se; A.O. Scott put it best when he described it as “infuriating”. Most thoughtful people know by now the broad causes behind this mess: a steadily growing pattern of abuses in the wake of financial deregulation begun during the go-go ’80s. Still- for context (and at the risk of over-simplification), I’ll try to encapsulate the gist of what went wrong: Before deregulation, a bank only sold mortgages to customers who were good risks and could pay them back over time. With deregulation, obscure financial instruments were developed and promoted whereby high-risk mortgages could be packaged together and re-sold to large, speculative institutional investors. (Most of these investors never even attempted to understand these complex instruments or question their underlying value. All they knew and cared about was that they generated short-term profits.) With their own exposure thus diluted, banks started selling mortgages with little regard for risk. It was like printing money: the more mortgages they could generate, the greater the short-term gains. Hence the housing bubble, built on mortgages sold to people who likely could never pay them back. As this dense, elaborate house of cards gradually built itself up, the rich got richer, and the poor got set up. And when it all finally imploded in 2008, the reverberations were felt globally. The outrage I felt watching Inside Job came from several key arguments, expertly presented: First, there’s the sad, recurring reality that the biggest victims in financial downturns are in fact our poorest citizens, not the people who caused the whole mess to happen. It’s also frustrating to hear that warning bells were sounded, but with so many people focused on getting filthy rich, they were simply dismissed or ignored. But here’s the worst part: there has been virtually no accountability for this disaster. Why? Because the ties between government and business have been so closely linked for so long, that to pursue real justice would be an incredibly ugly and disruptive affair. Hank Paulson, Secretary of the Treasury when the crisis hit, was formerly head of Goldman, Sachs. His successor and the current man in the job, Tim Geithner, was previously head of the New York Fed. So perversely, the people appointed to oversee the soundness of the system are the same people who had a hand in undermining it in the first place. Even academia gets into the act, with the heads of some of our foremost business schools teaching the benefits of deregulated markets while quietly making most of their incomes as board members of the major investment banks. Conflict of interest anyone? What’s the worst punishment these CEOs have received? Inside Job rightly singles out Dick Fuld of Lehman Brothers. Having lived like a sultan, the poor man lost his job, but only after driving a once venerable company into the ground. And to ease the pain, he walked away with a severance paycheck in the hundreds of millions, while ordinary Americans were losing their jobs, their savings, and their homes. Inside Job also focuses on once-revered and respected figures like Alan Greenspan and Larry Summers — people who wielded immense power and influence on global markets, and who saw nothing amiss as the world approached a financial abyss. How have they been held accountable? The short answer is not at all, though it’s certain they’ve only gotten richer on book deals and speaking tours. Then there’s good old Ben Bernanke, undeniably in a position to spot the warning signs. It seems he simply had no clue. His punishment was a promotion to Greenspan’s old job, heading up the Federal Reserve, a highly influential post he retains to this day. A lot of supposedly brilliant minds seem to justify it all by claiming that our whole financial system– the one they created, mind you– has become so complex that nobody could have seen this disaster coming. This is infuriating. After all, isn’t their ability to manage this complexity the reason they’re paid so well? And if they fall down on the job and betray the public trust, shouldn’t their positions and their pay be affected? I guess not. The word is that bonus packages are back and plentiful on Wall Street. And CEOs are still making a killing. The basic, maddening, bottom-line truth is that nothing has really changed as a result of this cataclysm. And neither party can be singled out for this paralysis; as Inside Job aptly demonstrates, when it comes to abuses in the financial system, both Republicans and Democrats earn an “F” on their report cards. After much bold initial talk from the current administration about financial reform, no substantive bill addressing it is on the horizon. And with a pro-business Republican House majority supporting smaller government, it’s unlikely anything significant would pass anyhow. I suppose Washington figures Americans have short memories. Once the recovery is truly underway and people get their jobs back, they will quickly forget what happened in 2008, and why. Inside Job is a movie that challenges that assumption, that riles you up and makes you want to take action. Could average citizens use this film to inspire a grass roots movement that hastens a day of judgment for the various fat cats who got off scot-free, and demands real reform in our financial system? It may sound far-fetched, but wilder things have happened. After all, they say it was the cell phone that toppled the government in Egypt. Unsure what to choose on Netflix? Visit www.bestmoviesbyfarr.com To see John’s videos for WNET-Channel 13, go to www.reel13.org

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White House Chief Of Staff Pressed About Lack Of Jail Time For Wall Street Culprits

March 6, 2011

WASHINGTON — White House Chief of Staff Bill Daley declined on Sunday to bring the president into the debate over why no major player in the collapse of the financial system in 2008 has gone to jail. Appearing on NBC’s “Meet the Press,” Daley, who worked as an executive at JP Morgan prior to joining the White House, said it wasn’t the role of a politician, let alone a president, to weigh in on judicial matters. Besides that, he added, the reforms that Obama instituted years after the crash occurred were indicative of his dissatisfaction with the financial sector. “I think the president, no one has been more out front on the need for financial reform,” said Daley. “Obviously the justice system will take its place and the politicians should not engage in trying to say who should be prosecuted or who should not. That is not a responsible thing to do. You have a number of attorney generals moving forward on cases that are legitimate. But the president felt very strongly — that’s why he fought so hard for national regulatory reform — that the system has got to change. “Most of the laws that the financial sector worked under were enacted closer to the Civil War than to this century. He fought, it was tough, to be honest with you, I was in an industry that… fought many of it, not all of it, probably 85 percent of it the industry wanted. They wanted to stop too-big-to-fail and a number of other of things. But it was controversial, difficult, but he hung in there and got what he wanted.” Pressed a bit further, Daley refused once again to say whether “it is illegitimate or not” for the people to demand jail time for the culprits of the crash. “Politicians should not get involved. Producers, directors can do that. But politicians should not get involved.” The director to whom Daley was referring was Charles Ferguson, who won an Academy Award for his documentary “Inside Job” — which looked at the cause and scope of the crash — and who bemoaned the lack of jail time for the primary offenders during his acceptance speech. Daley’s past work on Wall Street makes him, perhaps, not the best spokesman for the administration on this front — serious-minded observers would dispute his claim that the law signed by the president ends too-big-to-fail. And his acknowledgment that the industry in which he served opposed (however slightly) the president’s regulatory reform laws only underscores the fact that the White House has been as concerned with courting the support of the financial sector as they have been with prosecuting its transgressions. WATCH:

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David Morris: And the Academy Award for Cowardice Goes to…

March 3, 2011

From all accounts, Charles Ferguson’s acceptance speech was the highlight of the Oscars. After winning an Oscar for Best Documentary for Inside Job , a compelling and searing indictment of Wall Street’s role in the economic crisis, Ferguson injected some much-needed real world relevance amidst the fabulously glitzy proceedings. “Forgive me, I must start by pointing out that three years after a horrific financial crisis caused by fraud, not a single financial executive has gone to jail — and that’s wrong.” That bears repeating. Not a single financial executive has gone to jail. The government was not always so cowed by Wall Street. In the 1980s, after deregulation led to the takeover of Savings and Loans by aggressive entrepreneurs who committed fraud on a massive scale, the federal government swung into action. Joe Nocera in the New York Times recalls, “There were a dozen or more Justice Department task forces. Over 1,000 F.B.I. agents were involved. The government attitude was that it would do whatever it took to bring crooked bank executives to justice.” Nearly 1,000 savings and loans — a third of the industry — collapsed, costing taxpayers over $200 billions. And the Department of Justice won 1,000 felony convictions in major cases. The Department of Justice still prosecutes cases of financial malfeasance, as long as the perpetrators are not heads of major financial institutions. Consider its vigorous prosecution of Martha Stewart, who was convicted in March 2004, not even of insider trading but of lying to the SEC and the FBI about insider trading. She served five months in a West Virginia federal prison. Compare that to the way the Department of Justice approached the investigation of John Mack that same year. Mack had just stepped down as President of Morgan Stanley and would soon become its CEO and Chairman of its Board. In the most recent of what are rapidly becoming iconic pieces of an era in Rolling Stone Matt Taibbi tells the story of a young man named Gary Aguirre who joined the SEC in September 2004 and shortly thereafter began investigating an insider-trading complaint against a hedge fund manager named Art Samberg. One day, with no advance research or discussion, Samberg had suddenly started buying up huge quantities of shares in a firm called Heller Financial. “It was as if Art Samberg woke up one morning and a voice from the heavens told him to start buying Heller,” Aguirre recalls. “And he wasn’t just buying shares — there were some days when he was trying to buy three times as many shares as were being traded that day.” A few weeks later, Heller was bought by General Electric — and Samberg pocketed $18 million. Aguirre identified Mack, a close friend of Samberg’s, as the person most likely to have tipped Samberg off. He discovered that Mack had been begging Samberg to cut him into a potentially lucrative deal involving a spinoff of the tech company Lucent. “Mack is busting my chops” to give him a piece of the action, Samberg told an employee in an e-mail.” A few days after Samberg sent that e-mail, Mack flew to Switzerland to interview for a top job at Credit Suisse First Boston. Among the investment bank’s clients was Heller Financial. As soon as Mack returned from that trip, he called Samberg. The next morning, Mack was cut into the Lucent deal, an investment that made him more than $10 million. And as soon as the market reopened after the weekend, Samberg started buying every Heller share he could, right before it was snapped up by GE. The deal looked like a classic case of insider trading. But in the summer of 2005, when Aguirre told his boss he planned to interview Mack, things started getting weird. His boss told him the case wasn’t likely to fly, explaining that Mack had “powerful political connections.” (The investment banker had been a fundraising “Ranger” for George Bush in 2004, and would go on to be a key backer of Hillary Clinton in 2008.) Aguirre was contacted by Morgan Stanley’s regulatory liaison, a former top aide to Eliot Spitzer. A few days later, another of the firm’s lawyers, Mary Jo White, formerly U.S. attorney of the Southern District of New York, called the SEC director of enforcement. Taibbi caustically and accurately sums up the situation. Pause for a minute to take this in. Aguirre, an SEC foot soldier, is trying to interview a major Wall Street executive — not handcuff the guy or impound his yacht, mind you, just talk to him. In the course of doing so, he finds out that his target’s firm is being represented not only by Eliot Spitzer’s former top aide, but by the former U.S. attorney overseeing Wall Street, who is going four levels over his head to speak directly to the chief of the SEC’s enforcement division — not Aguirre’s boss, but his boss’s boss’s boss’s boss. Mack himself, meanwhile, was being represented by Gary Lynch, a former SEC director of enforcement. Aguirre didn’t stand a chance. A month after he complained to his supervisors that he was being blocked from interviewing Mack, he was summarily fired, without notice. The case against Mack was immediately dropped: all depositions canceled, no further subpoenas issued. In 2011 neither Congress nor the White House has much stomach for prosecuting Wall Street. Indeed, the four Republicans on the Financial Crisis Inquiry Commission (FCIC) voted to strip the following words from its report: “Wall Street,” “deregulation”. As

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Zachary Karabell: The Insider Trading Scandal: Is It the Crime or the Prosecution?

March 2, 2011

The media is abuzz with the news that the former head of McKinsey consulting, Goldman Sachs director and current board member of Proctor & Gamble Rajat Gupta has been charged with insider trading by the Securities and Exchange Commission. He is now the highest-profile individual to be implicated in the widespread investigation driven by U.S. Attorney Preet Bharara that has already ensnared dozens of lower-level traders and Raj Rajaratnam , former head of hedge fund Galleon. The spin has been predictably excoriating, describing Gupta as yet another Wall Street/business titan warped by greed and hubris who is now witnessing his fall. Though he has not been convicted of anything, he has already been found guilty in the press, and it’s safe to say that if the day comes when charges are dropped or he is exonerated, that news will not be on the front page of any paper or grace the home page of any web site. Such is the court of public opinion, which has little sympathy for the masters of finance who so recently contributed to a near-meltdown of the very system that made them so rich. I have opinion about the guilt or lack thereof of Gupta or Rajaratnam. Like almost everyone save for a handful involved, I don’t know what happened and likely never will. But the nature of this investigation should raise the eyebrows even of those who believe that there is something rotten at the heart of American business. In essence, this investigation and its prosecutions raise the question of whether we are criminalizing behavior simply because it is deemed immoral and allowing prosecutors too much latitude to pry into personal relationships. Both the left and the right are wary of the potential abuses of government investigatory power, and the United States has nurtured a long and powerful tradition of wariness of the claims of officials to be on the side of the angels in pursuing wrong-doing. Until 2000, when Regulation FD (“fair disclosure”) was created by the SEC to curb the trading abuses of the internet bubble of the 1990s where large institutional investors were seen as having an unfair advantage and access to information compared to the masses who bought and sold shares on-line. Reg FD holds that no employee of a publicly traded company could disclose material non-public information on a selective basis. Give it to one person and you had to give to all people, in order to level the investing playing field. Fair enough in theory, but much stickier in practice. There’s a bright line between someone at Intel sharing what the company’s sales are to a friend who trades stocks and having a general conversation about how business is going, but a much fuzzier line between having a general conversation over drinks and complaining that senior management doesn’t appreciate some new business trend. There have been many cases of prosecution of individuals who have crossed the bright line, but ensnaring big fish is often harder, so prosecutors become more creative. In the case of Gupta, he made calls to Rajaratnam just after several important meetings of the Goldman Sachs board, and Galleon then made trades of Goldman stock (or options) just after those calls. So it’s hard to deny the appearance that information was exchanged. But just what information? What if Gupta simply said “It went well.” Or “it didn’t.” That might have been sufficient information to trade on, and it certainly was information that the general public didn’t have. But is that insider trading according to the definition? Is it disclosure of material non-public information? Are all forms of communication between insiders and outsiders to be criminalized? And if such communication creates some advantages, are advantages born of personal relationships “unfair” to the point where there should be legal action? In part, all of this is the fallout of a culture looking for villains for the financial crisis. As Charles Ferguson, director of the documentary Inside Job said in accepting his Academy Award, no financial executive has gone to jail for their role in the financial meltdown, and in his view, that is wrong. But is it? Generals routinely mess up during war, either from incompetence, vanity, arrogance or simply the unexpected. They are recalled and sacked, we hope, but unless it can be shown that they willfully and purposely screwed up, they are in our society rarely see a court-martial. Financial executives were culpable in myriad decisions that led to the financial crisis, but that in itself does not translate into prosecution and jail time. Finally, prosecutors have extraordinary powers in our society, and it is difficult for them to resist the temptation to use the law to enforce public mores. At any given time, some law on the books can be used to police a wide range of behavior. That’s great if you agree with the morality that they are enforcing (no abortions, for instance, or no emissions by chemical companies). But it’s not so great when that morality is at odds with yours (no abortions, for instance, or no emissions by chemical companies). We live in a system where trials are supposed to afford the accused a chance to clear their name or face penalty, but in a world where reputations are hard to build and easy to lose, prosecutors have undeniable advantages. It is up to them to use that power judiciously. I have managed money and still do. Stocks today move for all sorts of reasons, are traded globally and electronically often by programs rather than people, and often based on factors having nothing to do with the company per se. Rarely is one data point sufficient. As a result, insider information is neither worth the risk of obtaining it nor usually worth much even if you do . What is perhaps most striking about this case from that perspective is that Galleon is alleged to have made a grand total of $17 million in profit from this inside information. That is a lot of money in the real world, but for Galleon’s bottom line, it hardly rates, and certainly would be worth nowhere near the risk of obtaining it by violating Reg FD. If the charges are true as alleged, then these individuals destroyed careers and their future not for untold riches but for minimal advantage relative to others who did not flirt with the rules. The narrative may say greed, but in truth, the gain wasn’t enough for the risk. Galleon reaped hundreds of millions annually by legitimate means, and Gupta supposedly reaped nothing for his insider troubles. We like the simple narratives, but human motives, those are often far more complicated.

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Tavis Smiley: My Conversation With Filmmaker Charles Ferguson

February 28, 2011

The day after his Best Documentary win at this year’s Academy Awards, I sat down with filmmaker Charles Ferguson for a conversation about his film, Inside Job . The full conversation airs tonight on PBS.

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Tavis Smiley: My Conversation With Filmmaker Charles Ferguson

February 28, 2011

The day after his Best Documentary win at this year’s Academy Awards, I sat down with filmmaker Charles Ferguson for a conversation about his film, Inside Job . The full conversation airs tonight on PBS.

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Robert L. Cavnar: Responding to the Hydraulic Fracturing Issue

February 8, 2011

As we’ve discussed before, the practice of hydraulic fracturing to produce oil and gas has grown into a controversy being argued about in local townhalls all over the country all the way to the halls of Congress in Washington.

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Charles H. Green: The Best Movie You Haven’t Heard of: Inside Job

November 22, 2010

Here are the ratings (% who liked) from Flixster for some of the movies playing this weekend: 90% The Social Network 88% Inside Job 81% Unstoppable 78% MegaMind 78% Jackass 3-D 77% Red 75% Skyline 65% Due Date 65% Morning Glory 64% The Next Three Days 54% Saw 3D You know The Social Network. But how about the #2 movie, Inside Job ? Ever hear of it? 96% of the critics liked it. Rotten Tomatoes rated it 96% . It’s narrated by Matt Damon. Feeling out of the loop yet? Why haven’t you heard of this movie? More on obscurity later, but here’s the official synopsis: ‘Inside Job’ is the first film to provide a comprehensive analysis of the global financial crisis of 2008, which at a cost over $20 trillion, caused… ‘Inside Job’ is the first film to provide a comprehensive analysis of the global financial crisis of 2008, which at a cost over $20 trillion, caused millions of people to lose their jobs and homes in the worst recession since the Great Depression, and nearly resulted in a global financial collapse. Through exhaustive research and extensive interviews with key financial insiders, politicians, journalists, and academics, the film traces the rise of a rogue industry which has corrupted politics, regulation, and academia. It was made on location in the United States, Iceland, England, France, Singapore, and China. There has been no shortage of books and articles about the meltdown. But most of those have had a reporter’s flavor to them–here’s what happened, then here’s what happened next. I felt that no one had really pulled it together with a narrative theme and the data to back it up. Until this weekend, that is. The theme is now not just clear, but tight. Bad things happened. They were not an accident. They were the results of bad people behaving badly. They knew what they were doing. They did them anyway. And to this day, they refuse to acknowledge responsibility. Think of this movie as what Michael Moore would produce if he had a PhD in economics and a career as a Federal Prosecutor. It’s the project of Charles Ferguson , who in fact does have a PhD in political science from MIT (he has also consulted to the White House and the Department of Defense, was a Senior Fellow at Brookings, and a member of the Council on Foreign Relations). You may know Ferguson as the director of No End in Sight , a powerful documentary about the Iraq war. He’s confident enough to interrupt an economist and say , ‘You can’t be serious about that. If you would have looked, you would have found things.’ Or to tell a former Bush administration under-secretary of the Treasury, “Forgive me, but that’s clearly not true.” Here is a review by A.O. Scott , in the New York Times. Boston.com calls it “a masterpiece of investigative nonfiction moviemaking — a scathing, outrageous, depressing, comical, horrifying report on what and who brought on the crisis. Here’s Kenneth Turan’s review in the LA Times. Go see for yourself; see the trailer here . The Role of Ideology in the Meltdown There’s much to say about this documentary; I’ll limit my thoughts to just one–the role of ideas in the meltdown. In this day and age of neuro-explanations and insistence that only measurable behavior is relevant for management, the role of ideas gets pooh-poohed. Big mistake. I’ve written before about the power of strategic doctrine taught in business schools to negatively influence our general business thinking. But after seeing this documentary, I’m newly persuaded. Ideas have huge power: especially when those ideas happen to greatly serve the economic interests of patrons. In the pharmaceutical industry, it’s become well accepted that a researcher or writer who takes money from a drug company is at the very least subject to rules of disclosure. Failure to do so constitutes an immediate presumption of conflict of interest. Yet somehow, we have never held our nation’s leading economists and business school faculty to the same standards. One of the most eye-opening aspects of Inside Job for me was to put this issue front and center. Some of Fergusons’ hardest-hitting interviews are with the elite heads of academic institutions: Frederic Mishkin , a former Fed governor, now at Columbia Business School; his boss Glenn Hubbard , chairman of the Council of Economic Advisers under George W. Bush; John Campbell , Harvard’s economics department chairman; and fellow Harvard economist Martin Feldstein . They come off, respectively, as incompetent, blustering, inarticulate, and smug. None of them seem to have noticed a disconnect between their laissez-faire ideas and the disasters engineered by those who quoted them; much less any sense of impropriety at the comfortable financial relationships they shared with those very firms. Somewhere there is a researcher at Harvard Medical School screaming at the injustice of his not being published in NEJM because of some disclosure requirements, while his academic counterparts in business and economics were happily and openly opining on the health of the Icelandic banking system and the liquidity of the US subprime mortgage market, all the while getting very well paid . (Note: b-school profs provide functional consulting services to companies all the time; I don’t see that as an issue. This is vastly different; more another time). Results of the Meltdown Ferguson touches clearly, albeit briefly, on one enduring outcome of this decades-long debacle–the increased gap in the US between the haves and the have-nots. In 1976, the richest 1% of Americans had 9% of the income . Now they have 24%. From 1980 to 2005, 80% of the gain in income went to the top 1% . Guess what industry disproportionately accounts for that gain? But the most significant casualty, I think, is a great old American belief: the belief that you can make it here in the good old USA, land of opportunity, where anyone can be what they want. You don’t have to be limited by the circumstances of your birth, like in all those Old World countries. Sorry: no longer true. By one study , it is harder for someone to get ahead now in the US than it is in Denmark, Australia, Norway, Finland, Canada, Sweden, Germany, Spain, and even France. Only Italy and the UK are more class-bound, and I’ve seen other studies where even the Brits are less sclerotic than we are. That decline in opportunity is another result of greater income disparity. Again, one of the legacies of the financial industry. You may disagree with a lot of what I’ve said here. You may think this movie won’t change your mind; and since it’s extremely hard to change people’s minds, you may be right. But if so, may I suggest you owe it to yourself to see it–if only to write back and point out the flaws in the movie.

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Stephen Lambert: The Flaw: Examining the Roots of Economic Malaise

October 24, 2010

The dramatic increase in income inequality over the last ten years is not news to readers of this site, but the extent to which it actually caused the financial crisis is still not widely appreciated. As Ray Brescia pointed out this month in all the debates over the Dodd-Frank financial reforms, few in Congress raised questions about the impact of growing inequality on the very crisis that brought about the need for reform. As a producer of documentaries and television programs there are different ways in which one can tell the story of what’s happening to the economy. At Studio Lambert we produce two mainstream shows that probably only exist because they reflect the economic zeitgeist — Undercover Boss on CBS and The Fairy Jobmother which launches this week on Lifetime. Arianna Huffington was kind enough to say that Undercover Boss sheds light each week on the chasm between America’s haves and have-nots. She thought it put flesh and blood on statistics like the fact that thirty years ago top executives at S&P 500 companies made an average of 30 times what their workers did and now they make 300 times as much. But to understand the real significance of this inequality one needs a more analytical approach than a reality show can offer. We’ve just finished producing a feature documentary called The Flaw that attempts to explain the underlying causes of the crisis in more depth than any documentary to date. The film premieres in the UK next month, but after a preview screening a couple of weeks ago at London’s Royal Society of Arts, Matthew Taylor, Tony Blair’s former head of the policy and now head of the RSA, wrote , “it is a terrific film, intelligent and persuasive, but also entertaining, witty and at times moving. Most fascinating to me was its core thesis; that the biggest driver of the crisis was wage and asset inequality.” So what is the film’s argument? The title refers to Alan Greenspan’s admission in his testimony before Congress that he had discovered “a flaw in the model that I perceived is the critical functioning structure that defines how the world works so to speak.” A humbled Greenspan admitted that it had been a mistake to put so much faith in the self-correcting power of free markets and that he had failed to anticipate the self-destructive nature of wanton mortgage lending and the housing and credit bubble it generated. Greenspan had taken the view that the central bank shouldn’t question increasing asset prices, it should only take action when they started to fall. He cut interest rates and tried to boost activity whenever there was the slightest drop. And, of course, boosting economic activity is just a euphemism for trying to encourage consumers and businesses to borrow even more. The film highlights the fact that the only other time in the last century when top earners had such a high share of total income was just before the Great Crash. The share of total American income going to the top 1% peaked in 1929 at about 22%. After the Crash and the start of World War II it fell steadily so that by the 1970s the top 1% were receiving only 9% of national income. But then it started to rise again; in the last ten years it has shot up like a 4th of July rocket to about the same level as in 1929. This increase can largely be explained by the credit bubble that Greenspan presided over. Economic activity, profit growth and credit creation are all intimately linked. As George Cooper, author of The Origin of Financial Crises: Central banks, Credit Bubbles and the Efficient Market Fallacy , explains in the film, “if the banks are more willing to lend it becomes easier for companies and households to spend, because they can borrow money. As credit rises, corporate profits rise which means pay and dividends rise. Well who tends to own the shares in the corporations and the shares in the banks? Generally it’s the wealthier people that own the capital stock of an economy. So if profitability is being boosted then there’s a natural tendency to polarize wealth distribution within the economy as well. It’s a symptom of a credit cycle.” This new inequality can also be seen in the way that the bottom 90% lost out. In the three decades after the WW2 they were getting roughly 65% of national income, but since the 1980s it’s fallen to 50% as the double whammies of the rise of globalization and de-industrialization hit the American workforce. What is often not appreciated is how this upward income redistribution in itself tends to ignite asset bubbles. As you go up the income distribution scale, what people spend their money on changes: there is a relative decrease in expenditure on consumer goods and an increase on housing and financial assets. “The income redistribution created a bidding for houses,” explains Cornell University’s Professor Robert Frank. “People at the top buy mansions. People in the middle don’t seem offended by that in America. They want to see pictures of the mansions. But when the people at the top build bigger, their bigger houses shift the frame of reference for people who are near them in the income distribution; people who have a lot of money, but not quite at the top. So you get a cascade one stage at a time that drifts down through the income distribution.” Robert Schiller of the Case-Schiller Housing Index fame shows how house prices, when adjusted for inflation, remained flat for a century between 1890 and 1990 and then there was a huge bubble in the US starting in 2000. “On the one hand you have home buyers who are struggling to make ends meet,” argues Harvard economic historian Louis Hyman, “looking for the only way they know how to make money in our economy. They can’t make money through their labor, so but maybe they can make it through buying a house and seeing the value of that house increase. So people look to mortgages, these easy-to-get mortgages as a way to finally get their share of the American Dream. And, on the other hand, the income inequality produced a ready supply of capital at the top to be invested in these kinds of mortgages. So while the top was not willing to pay the bottom higher wages, they were willing to lend them money.” The compelling, but flawed, logic of mortgage securitization finance is explained by some of its first-hand practitioners. And Josh Zinner and Sarah Ludwig of NEDAP , one of the many campaigning groups promoting financial justice for the low income communities, point out that the majority of the loans that were generated and then sold to Wall Street to be securitized were refinance loans. They weren’t adding to home ownership. 77% of the sub-prime loans made were refinancing loans made to people who had built up equity in their homes. “If you look at the deed records for low income neighborhoods,” says Zinner, “you’ll see so many homes where people were refinanced over and over and over, sometimes several times in one year until their equity is gone and they lose the house.” “The reason why the money gets allocated into consumer and mortgage debt,” says Hyman, “is because it actually pays as a better return than investing it in businesses, than investing it in factories or things that make things. And it’s this simple banal calculation that’s behind all of this, it’s not some greedy Wall Street banker. Wall Street bankers and all capitalists are always greedy, that’s the basis of our entire system. It’s that the opportunities for investment are different than they used to be.” This fall in the share in the bottom 90% represents a transfer upwards of roughly one and a half trillion dollars each year to the top 1%, calculates Professor Robert Wade of the London School of Economics. “This enormous upwards redistribution of American income took place in a stable democracy with governments that were promoting this upwards redistribution being re-elected time and time again. It’s a very interesting question of how was the American elite able to get away with it. You have roughly one and a half trillion going up and a roughly one trillion a year, coming down in the form of house equity refinancing. If the American population had been receiving something like the same income share as in the 1950s and 60s then they would have been able to increase their consumption in a sustainable way out of rising income. But that’s not what happened.” Instead, we masked a lack of income growth by the fact that people supported their living standards with more debt. We all know what happened when the bubble burst. The film ends with Nobel-prize winning economist Joseph Stiglitz’s pithy summary. “What we are doing in effect is transferring money from people who would spend it to people who don’t need all that money and don’t spend it; hundreds of people getting more than a million dollars a year, even when their company makes a loss. When you have growing inequality, typically your level of consumption goes down. In the United States we said to those whose income was not going anywhere don’t worry continue to spend as if your income was going up. But the only way you do that is through debt and that particular model has been broken.” The Flaw premieres on 4 November at the Sheffield International Documentary Festival. It will be launched in United States early next year.

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Video: Filmmaker Ferguson Discusses Film on Financial Crisis: Video

September 14, 2010

Sept. 14 (Bloomberg) — Filmmaker Charles Ferguson talks about “Inside Job,” his documentary about the financial crisis. Ferguson speaks with Betty Liu on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)

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Vitaliy N. Katsenelson: Capitalism — A True Love Story

August 10, 2010

In the 1980s, in Soviet Russia, a few times a year my class walked to a movie theater where we were shown a documentary. Attendance was mandatory. The documentaries were different but the themes were the same: to the accompaniment of patriotic music, we learned about the righteousness of socialism, the greatness of Mother Russia, and the intelligence and foresight of our great leaders. To demonstrate how good we had it, we were shown images of “decaying” American capitalism. Of course, capitalism did not get the benefit of patriotic music as we were shown the poverty-stricken homeless, the KKK burning crosses and lynching blacks, and Russia-hating capitalists being poisoned by hamburgers (of course, later I learned this part about hamburgers was not a complete lie). Last year Americans voluntarily spent a few million dollars to see a documentary by Michael Moore: Capitalism: A Love Story . But don’t kid yourself, this piece of work is not a documentary, it lacks objectivity and has no intention of seeking the truth, and it is anti-American and anti-capitalist propaganda. Mr. Moore is a talented propagandist; in Soviet Russia this documentary would have gotten him a medal and elevated him into a state hero. A successful propaganda initiative has to have three elements: (1) to influence attitudes, instead of providing information, (2) to selectively present facts (i.e., lying by omission) to achieve a certain synthesis, and (3) to get an emotional rather than a rational response. There is little information in this movie. Moore spends the bulk of the film going through our country’s trash and presenting it as the main course. For instance, a corrupt judge sentences innocent teenagers to spend months at a privately owned (i.e., for-profit, nongovernmental) youth-correction facility, while the judge is getting kickbacks from the facility owners. Moore interviews these poor teenagers, and we feel bad for them, as we should. We feel angry. Moore directs this anger towards capitalism (i.e., private enterprise): it is rotten and corrupt. Of course, the fact that corruption and bribery are the rare exception in the US, not the rule (as in Russia), is never mentioned. Really, if you want to make a successful propaganda movie, you must evoke emotion and rightly or wrongly direct it at your subject of hate — in Moore’s case, capitalism. Moore shows families being evicted from their houses, in which some of them have lived for twenty years, and some of them have kids. Again, we feel bad for these people, we feel their pain, and we want to help. We are angry. That’s what Moore wants. But should we be angry at the bank that has given these people a loan? Or perhaps we should accept the fact that some people will make bad financial decisions, and they’ll pay a price. It is the easiest thing to blame a bank, or capitalism — they are not very popular today. But let’s do the impossible, let’s humanize a bank. Let’s say you and I and a few friends put our life savings together and start a bank. We take deposits and make loans. Should we “forgive” a loan on a house to a person who overextended, made bad financial choices, or found himself facing hardship and unable to earn his way out of it? If we do enough of this “forgiving” we’ll go bankrupt, our kids won’t go to college, and we’ll need to ask someone else to “forgive” us for the loans on our houses, credit cards, etc. I am not even mentioning our depositors losing their money (and the FDIC — the taxpayer — bailing them out) and our employees losing their jobs. So the heartless bank — you and I and a few friends — have to make a choice between sacrificing the well-being of our families for the sake of strangers. What would you do? See, this point is too rational and lacks the sensationalism of good propaganda; and thus Mr. Moore, who I am sure thought of it, omitted it. Moore attacks BofA for not resorting to charity and not extending a loan to a factory in Michigan, even after BofA received TARP money. The same logic I just went through applies to the huge, unpopular BofA. Should BofA have thrown away money in a loan to the factory, knowing that the factory would not be able to repay it? Is this not what got us into the present problem in the first place? Banks and Wall Street in general played a role in today’s crisis, but they were just one of many responsible players. Consumers in pursuit of keeping up with the Joneses overextended themselves (with the exception of cases of outright fraud, no one was forced to buy a bigger house). Rating agencies were getting paid by the customers they were rating. The Federal Reserve kept rates at very low levels for too long, politicians pressured lending at any cost, regulators were not regulating – and the list goes on. Vilifying banks as the only culprit is intellectually dishonest and a very myopic way to look at this complex problem, and Mr. Moore does just that! Moore brought a brigade of priests to proclaim: “Capitalism is evil, immoral”; “Jesus doesn’t like the rich”; “the rich will have a hard time getting into heaven.” Two employees from a factory, talking on camera, made a really important point about capitalism. They said something along the lines of, “Maybe we should start a cooperative or something, but no, we cannot; we don’t have the money, we are not capitalists.” Ayn Rand said it well in Atlas Shrugged: “But you say that money is made by the strong at the expense of the weak? What strength do you mean? It is not the strength of guns or muscles. Wealth is the product of man’s capacity to think. Then is money made by the man who invents a motor at the expense of those who did not invent it? Is money made by the intelligent at the expense of the fools? By the able at the expense of the incompetent? By the ambitious at the expense of the lazy?” Moore neglects to admit that capitalism has brought people out of poverty and socialism sunk them there. He blames rising health-care costs on HMOs, though HMOs are just a pass-through vehicle between payers and service providers. He accuses capitalism as a system that “allows getting away with paying so little.” He offers no alternative to our “broken” capitalism system other than let’s have “democracy.” This is laughable, as democracy is not a market system, it is a political system. What he wants is a command-based economy – the Soviet Russia that failed so miserably. He wants Mr. Mouch from Ayn Rand’s Atlas Shrugged, a mediocre bureaucrat who failed at everything in his life, to be put in charge of Mr. Moore’s version of a “democratic” economy (still not sure what that means). Mr. Mouch decided how much everyone produced, at what prices goods were sold, and what “fair” wages everyone got paid. In the end, despite sacrifice after sacrifice, Mr. Mouch’s economy collapses. Mr. Mouch’s visible “fair” hand fails to accomplish what the invisible “impartial” hand of the free market accomplishes so effortlessly. Mr. Moore’s propaganda flick ends with pictures of the aftermath of hurricane Katrina. The images are powerful, full of emotion, and again in his final misdirection, Moore manages to blame it on capitalism. Vitaliy N. Katsenelson, CFA, is a portfolio manager/director of research at Investment Management Associates in Denver, Colo. He is the author of “Active Value Investing: Making Money in Range-Bound Markets” (Wiley 2007). To receive Vitaliy’s future articles by email, click here .

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Goldman Sachs Commissions, Will Oversee Internal Documentary About … Goldman Sachs

July 24, 2010

Get ready for “Goldman Sachs: The Movie.” That isn’t a real movie title. But filmmaker Ric Burns, who created the PBS series “The Civil War” with his brother Ken, is shooting a documentary about the Wall Street firm. Goldman Sachs Group Inc. is paying for the film, has editorial control and is overseeing the project through its marketing department, a Goldman spokesman said. Mr. Burns, who didn’t return phone calls seeking comment, was approached by Goldman in 2007 and has been tackling the documentary on and off since then. The company’s history goes all the way back to the day in 1869 when German immigrant Marcus Goldman opened a one-room office on Pine Street in lower Manhattan, near the firm’s new headquarters.

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Emily Goligoski: To Catch a Dollar & Grameen America Bring Poverty Alternatives to Sundance

January 25, 2010

Finance conversations during the first weekend of the Sundance Film Festival tend to center around distribution deals and the price of heeled boots, so discussions about economic motivators to end domestic poverty are particularly refreshing. The premiere of the documentary To Catch a Dollar: Muhammad Yunus Banks on America about the first women recipients of Grameen America bank’s microloans was notable not just for its stories about low-income Queens residents but for the larger themes it’s bringing to Park City conversations this week. Before the screening introduced by producer/director/cinematographer Gayle Ferraro (whose first film Sixteen Decisions followed the story of a borrower in Bangladesh, where the bank first began operating in 1976), founder Dr. Muhammad Yunus spoke about inspiring business ingenuity in potential entrepreneurs. Along with two other Sundance film selection subjects, Harlem Children’s Zone founder Geoffrey Canada (of Waiting for Superman ) and environmentalist Lester Brown ( Climate Refugees ), the Nobel Peace Prize-winning economist said he is eager for a time when people don’t have to consider taking work that’s either in pursuit of profit-making or social aims only. His bank has managed to focus on the latter while expanding, but its introduction to the United States hasn’t been a seamless one. A young Grameen employee who advises groups of five borrowers in Jackson Heights — and whose simultaneous patience and frustration are the focus of much of the film — finds that her clients are less likely to be engaged with weekly group meetings than their Bangladeshi counterparts. Her expression of joking concern when she reads from a bank manual about livestock trading value (when the women she’s working with primarily work in clothing and hair extension sale) provides calm as the bank struggles to earn $6 million to set up a legal banking structure in the States, largely through Yunus’ nearly-constant speaking engagements. In moderating the “Can’t Be Done” pre-film discussion, Skoll Foundation CEO Sally Osberg said that the film demonstrates the need for social businesses to allow adaptations and be flexible in bringing their community programs to new locations. Direct transfer of methodology and practices isn’t realistic if growing organizations are to succeed, she said. It’s a lesson that is deftly presented in director Gerraro’s hands. Even after spending months capturing borrowers’ experiences and hardships in Grameen’s original country, it took her nearly two years and 400 hours of shooting Yunus’ outreach efforts to convince him to allow the bank’s expansion to be made into a feature film. His ultimate acceptance, along with grants from the Skoll Foundation and Sundance and news of the crash of the global finance system, allowed her to do so. The result of her perseverance — especially in trying to finance an independent film — is a thought-provoking look at Grameen America’s efforts to help thousands of women find financial stability for themselves and their families, and entrepreneurial mothers aren’t the only ones who stand to gain.

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Nose-Biting Traders in Chicago Give Way to Geeks in Documentary `Floored’

January 15, 2010

By Tony C. Dreibus Jan. 15 (Bloomberg) — Doug Pringle saw punches thrown, blood spilled and fortunes lost during his 17-year career at the Chicago Board of Trade . He misses it, every day. “The biting of the nose and the fights, sure, when you’re throwing around that kind of money, people tend to lose it sometimes,” said Pringle, 42, who traded corn, soybeans, 10- year Treasury notes and 30-year bonds. “I miss the excitement.” Chicago’s open-outcry nostalgists can now watch their slow- motion obituary on film. “Floored,” a documentary that premieres in the city tonight, captures the fading swagger of its exchange pits as electronic trading takes over. Traders and former traders in the film recount drug-fueled road trips with prostitutes, living in mansions, and a crash that included divorce and having to take a $400-a-week job. The numbers in Chicago’s pits peaked in 1997, with about 10,000 traders flailing their arms with buy and sell signals in a daily scrum of sweating and shouting, said Steve Prosniewski, a trader who’s one of the film’s producers. Less than 10 percent of those remain, he said. ‘Alive and Kicking’ “You were jammed like sardines, but alive and kicking,” said Prosniewski, 43. “Sometimes you’d drop all your trading cards and your pen on the floor, and you’d leave them there till the end of the day because you’d get crushed trying to bend over and get them.” Chris Felix left the floor several years ago after electronic trading became more common and open outcry started dying out. Felix said he still misses trading, and after watching the documentary on an advance DVD, he had a hard time sleeping. “I was so wound up, I couldn’t sleep for five hours,” said Felix, 37, who went on to start the Web site gizmohealth.com. “It was more like a flashback. I don’t miss the floor I left, but I miss the way it was.” CME Group Inc. allowed the filmmakers to shoot inside the Chicago Mercantile Exchange in 2007 and the CBOT in 2008. This month, it refused to let the film’s director return to the trading floor to be interviewed. Allan Schoenberg , a CME spokesman, declined to comment. ‘Unfortunate Realities’ James Allen Smith, the director, declined to speculate on why CME officials are no longer cooperating. Felix said he thinks it’s because “Floored” shows some “unfortunate realities of the business.” “The exchange, because it’s a multinational corporation, wants a marketing piece and to grow the business,” Felix said. “It isn’t in the CME Group’s best interest to address” certain questions. Another producer, Joe Gibbons, is also a trader and appears in the film. In an interview at the Gene Siskel Film Center , where “Floored” will be shown tonight, Gibbons recalled the mix of competition and camaraderie that marked life in the pits. “They’d rip your heart out,” said Gibbons, 49, who traded from 1985 to 2004 in the stock-index futures pits and now trades electronically. “Afterwards, the guy who just ripped your heart would go, ‘Can you give me a ride home?’” “Floored” documents the shift from open outcry to the electronic trading that has drained the pits of thousands of traders in the past decade. The CME doesn’t track the decline in how many people work on the floor, said Mary Haffenberg , a spokeswoman. No Degree Required Many pit traders who never went to college took pride in the fact that they could make more money than the guy next to them who had a business degree, Gibbons said. The electronic- trading firms are filled with engineers and computer scientists who anonymously trade with the click of a mouse, not off fear in the eyes of traders in the pits, he said. Making the switch could be difficult for people who have spent their entire careers trading on the floor, said Wesley Harr, 30, who trades on his own behalf. “For a lot of these guys, the transition from the pit to the computer screen is really a difficult hurdle to overcome,” Harr said by telephone from Philadelphia. “I was raised with a computer, so it’s not a big leap for me, but people who grew up doing it that way may have a harder time.” Michael Krueger, an equity derivatives trader at Timber Hill LLC in Greenwich, Connecticut, still misses the 10 years he spent on the floor of the Chicago Mercantile Exchange . “It was the greatest job you can hope to have,” said Krueger, who earned an advanced degree in computer science after leaving the pits. “I knew all types at the exchange who clawed and spit and bit their way to the top.” The Siskel center will have special screenings at 4 p.m. on Jan. 19 and 21 for traders leaving the pits. Smith, the director, made the movie to show future generations a disappearing world. “I hope it can be sort of a time capsule,” he said. “People have been predicting the end of the floor for 20-plus years. I wanted to say ‘Let’s look at this before it’s gone.’” To contact the reporter on this story: Tony C. Dreibus in Chicago at Tdreibus@bloomberg.net .

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Open-Outcry Trader Glamour Dims as Chicago Computers Ascend in Documentary

January 15, 2010

By Tony C. Dreibus Jan. 15 (Bloomberg) — Doug Pringle saw punches thrown, blood spilled and fortunes lost during his 17-year career at the Chicago Board of Trade . He misses it, every day. “The biting of the nose and the fights, sure, when you’re throwing around that kind of money, people tend to lose it sometimes,” said Pringle, 42, who traded corn, soybeans, 10- year Treasury notes and 30-year bonds. “I miss the excitement.” Chicago’s open-outcry nostalgists can now watch their slow- motion obituary on film. “Floored,” a documentary that premieres in the city tonight, captures the fading swagger of its exchange pits as electronic trading takes over. Traders and former traders in the film recount drug-fueled road trips with prostitutes, living in mansions, and a crash that included divorce and having to take a $400-a-week job. The numbers in Chicago’s pits peaked in 1997, with about 10,000 traders flailing their arms with buy and sell signals in a daily scrum of sweating and shouting, said Steve Prosniewski, a trader who’s one of the film’s producers. Less than 10 percent of those remain, he said. “You were jammed like sardines, but alive and kicking,” said Prosniewski, 43. “Sometimes you’d drop all your trading cards and your pen on the floor, and you’d leave them there till the end of the day because you’d get crushed trying to bend over and get them.” Chris Felix left the floor several years ago after electronic trading became more common and open outcry started dying out. Felix said he still misses trading, and after watching the documentary on an advance DVD, he had a hard time sleeping. Pit Flashbacks “I was so wound up, I couldn’t sleep for five hours,” said Felix, 37, who went on to start the Web site healthgizmo.com. “It was more like a flashback. I don’t miss the floor I left, but I miss the way it was.” CME Group Inc. allowed the filmmakers to shoot inside the Chicago Mercantile Exchange in 2007 and the CBOT in 2008. This month, it refused to let the film’s director return to the trading floor to be interviewed. Allan Schoenberg , a CME spokesman, declined to comment. James Allen Smith, the director, declined to speculate on why CME officials are no longer cooperating. Felix said he thinks it’s because “Floored” shows some “unfortunate realities of the business.” “The exchange, because it’s a multinational corporation, wants a marketing piece and to grow the business,” Felix said. “It isn’t in the CME Group’s best interest to address” certain questions. Competition and Camaraderie Another producer, Joe Gibbons, is also a trader and appears in the film. In an interview at the Gene Siskel Film Center , where “Floored” will be shown tonight, Gibbons recalled the mix of competition and camaraderie that marked life in the pits. “They’d rip your heart out,” said Gibbons, 49, who traded from 1985 to 2004 in the stock-index futures pits and now trades electronically. “Afterwards, the guy who just ripped your heart would go, ‘Can you give me a ride home?’” “Floored” documents the shift from open outcry to the electronic trading that has drained the pits of thousands of traders in the past decade. The CME doesn’t track the decline in how many people work on the floor, said Mary Haffenberg , a spokeswoman. Many pit traders took pride in the fact that they could make more money than the guy next to them who had a business degree, Gibbons said. The electronic-trading firms are filled with engineers and computer scientists who anonymously trade with the click of a mouse, not off fear in the eyes of traders in the pits, he said. Tough Transition Making the switch could be difficult for people who have spent their entire careers trading on the floor, said Wesley Harr, 30, who trades on his own behalf. “For a lot of these guys, the transition from the pit to the computer screen is really a difficult hurdle to overcome,” Harr said by telephone from Philadelphia. “I was raised with a computer, so it’s not a big leap for me, but people who grew up doing it that way may have a harder time.” Michael Krueger, an equity derivatives trader at Timber Hill LLC in Greenwich, Connecticut, still misses the 10 years he spent on the floor of the Chicago Mercantile Exchange . “It was the greatest job you can hope to have,” said Krueger, who earned an advanced degree in computer science after leaving the pits. “I knew all types at the exchange who clawed and spit and bit their way to the top.” Smith, the director, made the movie to show future generations a disappearing world. “I hope it can be sort of a time capsule,” he said. “People have been predicting the end of the floor for 20-plus years. I wanted to say ‘Let’s look at this before it’s gone.’” To contact the reporter on this story: Tony C. Dreibus in Chicago at Tdreibus@bloomberg.net .

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Elizabeth Warren Speaks With Michael Moore (VIDEO): Exclusive Footage

October 22, 2009

The House Financial Services Committee passed a watered-down version of the proposed Consumer Financial Protection Agency Thursday morning. In the words of Financial Services chairman Barney Frank: “We have restricted the CFPA from what the administration proposed.” The CFPA is largely the idea of Elizabeth Warren, the Harvard law professor who serves as the chair of the Congressional Oversight Panel for the TARP program, and who has long advocated for stronger consumer protections. The Huffington Post has been given exclusive video of a candid interview Warren gave to Michael Moore for his documentary “Capitalism: A Love Story,” much of which never made it into the film. In it, she expresses her disappointment at the lack of accountability that has come with the massive bailout of Wall Street, and explains why the need for a strong Consumer Financial Protection Agency is so urgent. The video is broken up into three clips below. In the first clip, Warren delves into the ever more complex financial instruments that Wall Street has designed in order to continue to enlarge their profits at the expense of their own consumers. It is here that Warren explains why we need a robust CFPA: Financial products, and they are products, just like toasters, are sold today with the most dangerous features embedded in them because that’s what drives profitability. What’s astonishing is that we let this happen. You can’t buy a toaster in America that has a one in five chance of exploding. But you can buy a mortgage that has a one in five chance of exploding, and they don’t even have to tell you about it… We have consumer protection for everything you touch, taste, smell, feel… But there is no equivalent for credit cards, for mortgages; there’s nothing. At one point Warren laments: “I teach contract law at Harvard Law School, and I can’t understand my own credit card. No, I am not kidding you.” WATCH: In the second clip, Warren describes how “the very people who drove the car over the cliff have been instrumental in shaping how the American taxpayer was supposed to save it. In the past,” she notes, “when you drove the car over a cliff, you lost your job.” She criticized the government for not conducting a thorough and transparent investigation into the causes of the financial crisis, which is essential because “responsibility is not just about blame. Responsibility is about making sure we fix this and it will not happen again.” Warren also suspects any such investigation would have serious legal ramifications: “I was talking to someone who spent many years as a prosecutor, and he said when that much money disappears it’s usually because somebody broke some laws somewhere.” WATCH: In the final clip Warren talks about what led her to Washington and what motivates her to continue her fight to protect the working class Americans. Her family is from a poor background, she relates, but they worked hard and succeeded, and then were sucked into the crisis along with much of the nation’s middle class. “If the people who were directly affected, people whose lives have been wrecked by this, are not represented at the table, we won’t get the right solutions,” Warren says emotionally. “Yeah, we’ll patch this up – and then in ten years it crashes again and it crashes again and it crashes again… My job is to be here for the people who just don’t get a voice in this game. They’ve been shut out now for 30 years in this. It’s to say no more.” Moore ends by professing his belief that the financial crisis and the ensuing solutions prove that not only is our current system immoral but also that it does not work. Warren grimaces but does not disagree directly with Moore. Instead she takes a different approach: But we made up these rules. The rules are of men, of people. We pick what the rules are. The rules have not been written for ordinary families, for the people who actually do the work. We have to rewrite those rules. WATCH:

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Polanski’s Art No Shield for Sex Crime With Child: Ann Woolner

September 30, 2009

Commentary by Ann Woolner Sept. 30 (Bloomberg) — Roman Polanski is an enormously talented film director who has suffered tragedy time and again. He is also an admitted child molester who fled the U.S. rather than face punishment. In the wake of his arrest in Switzerland last weekend at the request of California prosecutors, supporters seem to believe his art should absolve him of responsibility for his crime and for fleeing from the law. We like to say in America that no man is above the law, not even a president. But when it comes to Polanski, his supporters say it’s an outrage that the California prosecutors don’t forgive and try to forget, as his victim has. After all, this is a great artist. “A man of such talent, recognized throughout the world, recognized especially in the country that arrests him — all this is not very pleasant,” French Foreign Minister Bernard Kouchner said. The fact that authorities picked him up when he landed in Zurich to accept an industry award aggravates the ire. “It seems inadmissible,” reads one petition signed by scores of filmmakers and actors, almost all of them men, “that an international cultural event, paying homage to one of the greatest contemporary filmmakers, is used by the police to apprehend him.” Polanski’s supporters point out it has been 32 years since the crime, during which he has given the world some of the most haunting and emotionally provocative films made. Fearing Judge As for running from the law, a 2008 documentary reported he did so because he had reason to fear a showboating sentencing judge would reject the prosecution’s recommendation for probation. And while we’re getting this part of the argument out of the way, let me add that spending government resources, especially California’s sparse ones, pursuing a 32-year-old case which the victim wants dismissed, hardly seems wise. But the rest of the facts are these. Polanski, then 44, took a 13-year-old girl to Jack Nicholson’s house for a photo shoot when the actor was absent. There, Polanski gave her Champagne, a Quaalude, took a dip in a hot tub with her and had sex with her. More specifically, he raped her twice and performed oral sex, against her protests, however meek, “because I was afraid of him,” she told a grand jury. You can’t read her testimony without realizing how young she was and how malleable to suggestion from this accomplished man 31 years older than she. He should have done time, and lots of it, for taking advantage of her like he did. Guilty Plea But the girl, Samantha Gailey (now Samantha Geimer), wanted to avoid a trial, so Polanski admitted guilt to illegal intercourse and the prosecutor dropped the other five charges. He spent 42 days in jail, which would have been his entire punishment under an agreement his lawyer worked out with the district attorney. But Judge Laurence Rittenband was overheard the day before sentencing bragging at his country club that he would send Polanski away for the rest of his life, according to the documentary. So the director left his Mercedes at Los Angeles International Airport and fled to his native France, where he holds dual citizenship and where he has lived the past three decades. So let’s say the now-dead judge let his love of publicity overtake his sense of justice. Rittenband’s interviews with reporters while the case was pending and his remarks at the country club would surely have been grounds for removing him from the case. In fact, Rittenband was eventually kicked off the still- open case. Public Interest The scarier thing for Polanski would have been that even a wise judge would have been well within his legal authority to reject the plea deal, which is, after all, an agreement between opposing sides. Just because adversaries agree doesn’t mean the deal is in the public’s interest. That is why we have judges. And that is why U.S. District Judge Jed Rakoff threw out a $33 million settlement between the Securities and Exchange Commission and the Bank of America Corp., for example. And from a criminal justice perspective, you have to pause at the leniency of a 42-day sentence for sex with a 13-year-old girl, made more vulnerable by drugs and alcohol. Samantha Geimer has told reporters she long ago got over the trauma and wishes the prosecution would drop the case. Representing the People Prosecutors should consider victims’ wishes but not be dictated by them. The district attorney represents the people of the state, not any one victim. Besides, Polanski was arrested and held for extradition specifically because he fled the reach of the law, not because of the underlying crime. And that is a slap in the face to the whole system. Yes, the system is flawed. And you can’t blame Polanski for wanting to just leave. The ghoulish coverage of the murder of his first wife, Sharon Tate, and the media orgy that followed his sex crime no doubt was intolerable. Besides, he had already lived as a fugitive under more difficult circumstances, fleeing a Polish ghetto as a child after his mother’s death in Auschwitz. The shame is that it has taken this long to sort everything out. The blame for that lies with Polanski for refusing to answer for evading the law. Celebrate the man’s talent, honor his contributions to filmmaking. However gifted he is, Polanski’s art can’t serve as a reason to ignore his terrible crime or his refusal to answer for it. ( Ann Woolner is a Bloomberg News columnist. The opinions expressed are her own.) To contact the writer of this column: Ann Woolner in Atlanta at awoolner@bloomberg.net .

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